This paper investigates the steady-state combustion characteristics of the Homogeneous charge compression ignition(HCCI) engine with variable valve timing(VVT) and dimethyl ether(DME) direct injection, to find out its benefits in exhaust gas emissions. HCCI combustion is an attractive way to lower carbon dioxideCo₂), nitrogen oxides(NOx) emission and to allow higher fuel conversion efficiency. However, HCCI engine has inherent problem of narrow operating range at high load due to high in-cylinder peak pressure and consequent noise. To overcome this problem, the control of combustion start and heat release rate is required. It is difficult to control the start of combustion because HCCI combustion phase is closely linked to chemical reaction during a compression stroke. The combination of VVT and DME direct injection was chosen as the most promising strategy to control the HCCI combustion phase in this study. Regular gasoline was injected at intake port as main fuel, while small amount of DME was also injected directly into the cylinder as an ignition promoter for the control of ignition timing. Different intake valve timings were tested for combustion phase control. Regular gasoline was tested for HCCI operation and emission characteristics with various engine conditions. With HCCI operation, ignition delay and rapid burning angle were successfully controlled by the amount of internal EGR that was determined with VVT. For best IMEP and low HC emission, DME should be injected during early compression stroke. IMEP was mainly affected by the DME injection timing, and quantities of fuel DME and gasoline. HC emission was mainly affected by both the amount of gasoline and the DME injection timing. NOx emission was lower than conventional SI engine at gasoline lean region. However, NOx emission was similar to that in the conventional SI engine at gasoline rich region. CO emission was affected by the amount of gasoline and DME.